Many of my clients are ‘empty nesters’. The kids have grown and ‘flown the coop’ - either to college or to marriage or to new careers.
So what happens to all that money that is “saved” when the kids leave home and are on their own?
One might guess that the time is then ripe for parents to begin to save more towards retirement. However, a new study by our friends at the Center for Retirement Research (CRR) at Boston College does not support that theory.
In their article: “Do Households Save More When the Kids Leave Home?” by Irena Dushi, Alicia H. Munnell, Geoffrey T. Sanzenbacher, Anthony Webb, and Anqi Chen - the conclusions in brief are that - yes, parents have more expendable income and No, they do not use those extra funds to increase 401(K) contributions.
In short, according to the article: “empty nesters appear to spend more of the new-found slack in their budget, rather than save it…”
Empty nesters seem to prefer to spend their new found resources rather than save it for retirement. Is that good or bad? Well, it depends largely on your lifestyle and what plans you have for your future.
But, when the nest is empty, that might be a good opportunity to review your estate planning needs and assess what to do with all the money you are 'saving'.
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